As a looming budget deadline approaches in less than two weeks, Portland city bureaus are asking for hundreds of millions of dollars over the next five years through the Portland Clean Energy Fund to backfill budget gaps.
PCEF, created to address the impacts of climate change on communities of color and others most likely to need assistance, is funded through a tax on large retailers and has brought in considerably more money than city officials initially expected.
Portland Clean Energy Fund Committee members have expressed concerns that the process of allocating those dollars is rushed and could unintentionally create a precedent for ongoing funding to city government bureaus.
During a committee meeting last week, six city bureaus presented climate-related project proposals that totaled $282 million, seeking allocations from the fund over the next five years. The proposed funding would go toward the city’s transportation, housing, finance, parks and recreation, water, and environmental services bureaus. The city is also asking for an additional $100 million for tree planting and maintenance for hundreds of thousands of trees.
The Portland Clean Energy Fund Committee makes decisions about allocating climate justice funds to help marginalized adapt to the impacts of climate change.
Cassandra Profita
The proposals come after the climate fund program underwent a yearlong revamp, and after forecast tax collections skyrocketed past initial estimates.
PCEF is funded by levying a 1% tax on retail sales of large companies in the city, and revenue has repeatedly exceeded forecasts. Initial estimates calculated the fund would generate $40 million to $60 million each year. Since its inception in 2019, that tax surcharge has generated hundreds of millions more than anticipated, however.
That prompted Commissioner Carmen Rubio to propose a $540 million climate action plan for city bureaus, at a time when many bureaus are facing budget cuts. With city bureau budgets due in mid-February, Portland city officials are looking to the city’s clean energy fund to help fill those gaps.
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Related: Portland city commissioner proposes $540M of climate action funds toward city bureaus
Last week, committee members worried about how each city bureau would use the funds it seeks, including concerns that some proposals fall short of the fund’s original intent of centering communities of color and low-income communities most impacted by climate change.
PCEF Committee Co-Chair Megan Horst said the process and timeline pressures from the city to deliver funding recommendations were also not ideal.
“I’m careful about precedents we set,” she said. “At the same time, I recognize that when many city agencies are struggling, that there is an urgency to our need to act, and that I hope we as a committee can use our agency and power as an advisory board on PCEF to make recommendations in a timely fashion.”
Committee members were also concerned about workforce opportunities for people of color and many city bureaus using the term “community” without being explicit as to who exactly they were referring to. Committee members were also concerned that they had not discussed how city bureaus would report back on the programs they fund, and there was no discussion of accountability and transparency.
Climate funds soar as Portland bureaus face budget shortfalls
Last September, after multiple rounds of input from Portland residents, the city passed the Portland Clean Energy Fund’s $750 million five-year plan to invest in climate action.
According to a city economist, two weeks after City Council approved the multi-million-dollar plan, the city’s PCEF revenue forecast climbed by $540 million due to retail sales growing significantly more than projected. The city now forecasts PCEF will bring in $1.29 billion in revenue over five years.
Related: Portland approves 5-year, $750 million climate action plan
This is coming during a time when city bureaus are going through what Mayor Ted Wheeler has called a budget crisis. In a December memo to city bureaus, he said Portland has the second highest state and local income tax in the nation, and this is in part “driving Portlanders to leave to other cities,” and he said taxpayer incomes in Multnomah County fell by more than $1 billion in 2021.
In the memo, he said the city needs to be creative in how to “best utilize existing resources.” Clean energy funds are one of those resources, according to Wheeler.
“My office has been working with PCEF staff and other bureaus to identify several projects for which the Fund may be used and that align with PCEF’s goals and mission. To the fullest extent possible, PCEF funds should be used to support existing City projects, programs and services that align with PCEF’s goals and mission,” he said in the memo.
Committee requests further discussion
Questions lingered for PCEF committee members during last week’s meeting, including about the Portland Water Bureau’s intent to create a $2 million reserve from clean energy funds for the Portland Hydroelectric Project.
Committee member Paul Lumley said he understood the rationale behind a hydroelectric power reserve fund, but funding it from PCEF dollars may also open the doors for other city bureaus to request their own reserve funds.
“I just want to be careful with this proposal and maybe understand it a little bit more and find out if this is truly unique or are we setting a precedent here for other grantees,” he said.
Another committee member, Robin Wang, raised concerns at how quickly the city wants these funds allocated. He said the committee has stronger requirements for local nonprofits to secure funding than for city agencies.
Wang also expressed concern that the committee had not discussed how the Portland bureaus would report back on their work.
“The irony is that, for most PCEF-priority communities, government has not done well for them,” he said. “If anything, we should give government a higher bar in securing these funds.”
Horst said there should be more discussion about opening up the extra funds for the community organizations applying for funding in the new round of grants.
“A proposal I would have on that is that we set aside, I’ll say $100 million, to have some expansiveness for our recently adopted [climate investment plan],” she said. “If we get really great projects from our community orgs, let’s fund them more than what we said we would, we have the money.”
City Council has ultimate authority
Magan Reed, Portland Bureau of Planning and Sustainability spokesperson, said the committee’s recommendations about how to spend PCEF dollars is to be considered as part of the city’s budget process. But “ultimately, Council has the authority to accept, change, or reject the Committee’s recommendation.”
It was not clear when the committee would provide a recommendation to the city.
The PCEF committee was set to meet at Wednesday at 6 p.m. to further discuss the city bureaus’ proposals to make use of climate funds. The committee also has an additional meeting set on Friday.
Correction: The story has been updated to say Portland Mayor Ted Wheeler’s memo was issued in December 2023.